The G20 is coming to grips with what governments are and are not willing to do over the next year in terms of stimulus plans and regulations. Most agree that the bottom has been marked during this downturn, but that the recovery is going to be less than stellar in western eyes.

The language in London has been downright bellicose when it comes to bank bonuses and re-gigging remuneration packages -- and that is what has been coming from the regulators! Whether concrete proposals actually crystallize is another matter altogether. The reality is most leaders have one hand on the populist pulse (re-elections in the case of Britain and Germany) and the other on the wheel of a ship which has been through one heck of a storm.

Collective action, including more than a trillion dollars spent to prime the banking system, has provided us with more security, or at least the perception of more security than in September 2008. On the streets of London, we all witnessed a period of about a week when one did not know whether their financial institution would remain open. All of a sudden, depositors had to learn a great deal more about deposit insurance limits.

At the start of this year when the western led downturn started to really bite, one wave of economists boldly stated the decoupling theory widely touted the previous year had been proved to be wishful thinking. The so-called BRIC countries are export dependent and cannot excel without the support of European and U.S. demand, the collective logic concluded.

It is time for those doctors of emerging market doom to re-think their prognosis. Collectively, the U.S. and Europe will be lucky to grow between one and two percent over the next year. In contrast, China is already growing eight percent and India and Indonesia better than five and the broader Middle East around three and a half percent. This is not theory, but the real deal.

This week, I sat down with Egypt’s Trade and Industry Minister, Rachid Mohamed Rachid who continues to comb the east and west for growth opportunities on behalf of Egyptian companies. These days he is logging more long-haul trips to China and India in search of joint ventures or to recruit companies for special economic zones under development.

Rachid, as a former senior Unilever executive, is acutely aware of recessions and business cycles in general.

“Today we are not talking about theory but about facts. We are seeing numbers that are totally different than the U.S. and Europe. We are seeing prospects that are more bullish than the rest of the world.”

It is not easy to navigate larger economic tankers through these turbulent times, but that is exactly what some of these fast developing countries have done. When the export machine started to falter in China, it steered the economy to a domestic infrastructure build out -- not little league spending but some $9 trillion between now and 2017. The other billion person economy, India, was in the midst of a reconstruction plan that will see new railroads, airports and the rest built over the next two decades. Those who have travelled the roads or rails on India would not argue about the need to do more at this stage of development.

Some would contend this is good sound planning by the two future giants. The fact is that luck and good timing had a lot to do with it. The infrastructure plans were on the books and were rightly accelerated to respond to the downturn.

The storyline is not dissimilar in the Middle East. The Chief Executive of GE International Nani Beccalli-Falco points to the model of public-private partnerships in the region where there is a track record of growth.

“We are getting out [of the downturn] because the so-called emerging countries, which in my mind are not emerging anymore because they have already emerged, are really pulling the global economy,” said the finely-dressed Italian from Turin, “You think about China, you think about India, you think about the Middle East, you think about Brazil.”

So while government leaders try to develop a consensus for future action, those with capital reserves will keep their taps open on a large scale. That is, what they say in business, not theoretical but “the real deal.”

This summer marked the 40th anniversary of astronaut Neil Armstrong’s first steps on the moon. On July 21st 1969 he uttered the phrase, “That's one small step for man, one giant leap for mankind."

There has been hours and hours of analysis about dropping the “a” as in one small step for a man, because it formed a grammatical contradiction. Armstrong said he hoped history would grant him some leeway and again further analysis suggests that the audio signal might have been interrupted during his historic walk.

I am recalling that famous two and a half hour journey on the moon’s surface because today there is a spirited intellectual debate on whether the financial crisis of the past year will fundamentally change our approach to business, or be just an interruption on the path to globalization.

During this month, nearly every strand of the crisis is being revisited to understand where we have been and what regulatory steps will emerge at the G20 summit in Pittsburgh. But, maybe we are missing the bigger picture.

I have listened to astronauts talking about the mind-stretching image of looking at earth from space. One’s perspective, I am told, changes dramatically after such an experience and maybe that is what we should be doing ourselves right now -- looking not at what transpired in the past year or the decade that led to the asset bubble, but instead on the global puzzle being assembled.

The smart minds are looking both forwards and back. Each year I spend a few days in the Alps with a group of German industrialists and businessmen to make sense of the world today. Last year, the talks took place just two days prior to the collapse of Lehman Brothers. I went back to look at what was said then and the analysis was incredibly prescient.

The business community pointed to historic bank bailouts on a scale we have not seen before, more regulation of financial products by central banks leading to global rules and finally an effort to weed out the Madoffs of the world. The final point seems to be more difficult to police after the other well-known and recent examples of Enron, WorldCom and Tyco.

The reality is one would never have dreamed of a $1.5 trillion deficit for the U.S., that Washington must drag around like a ball and chain for years to come. Europe and the U.S. are learning, much like Japan during the lost decade of the 1990s, the long-term implications of such a financial shock to the system.

J.P. Morgan Chase bank released a study talking about a sizable lowering of the classic return on equity for banks from 15 percent down to 11 percent with higher capital requirements and stricter regulations. No doubt, banks will remain under the magnifying glass.

But the Chief Financial Officer of Siemens, Joe Kaeser is suggesting something a bit different. His company has over 400,000 employees all over the world and only recently recovered from its own shock linked to compliance practices and kickbacks in 2006. Kaeser sees this crisis as the next big step for globalization.

While the West is living on borrowed time and money, the economies of the East have re-grouped quickly. Many tried to debunk the decoupling of the East from the West, but with the divergence of growth we are witnessing today it is difficult to not believe in a higher grade of de-coupling and the bigger march towards further globalization.

Eight, five and five -- those are the expected percentage annual growth rates for China, India and Indonesia for 2009 and Chinese Premier Wen Jiabao is confident that his $9 trillion stimulus plan will maintain that expansion through 2015.

Oil in the $60-70 range should provide above average growth for the Middle East. Both China and the Middle East remain dependent on Europe and the U.S. for growth, but certainly less so than before.

The next big step in globalization for the major industrial groups means to go where opportunity presents itself. GE for example recently landed a $2.5 billion deal to build power stations in Kuwait. Siemens secured a similar size contract for a water and power operation in Saudi Arabia a few years back.

It may have felt like we all stepped off the cliff in September 2008, with many forced to ask the simple question, "Is my bank safe?" Instead of winding the clock back a year, let’s take inspiration instead from Major General Armstrong and his historic words four decades ago.

As I went for my morning espresso macchiato this week I glanced at a newspaper stand and saw the British headline “Recession is officially over”.

A think tank here in London used the calculation of manufacturing output rising for two months in a row to support their premise. Everyone, including this writer, wants to call an end to the nasty times, after all this month marks one year since Lehman Brothers was allowed to go bust, which was the last nudge for the global banking system over the cliff.

The Dow Jones Industrials index is reaching out for the 10,000 mark and the FTSE 100 has recently passed the 5000 threshold, both technical and psychological barriers for investors. But no one really wants to address the ten thousand pound elephant sitting on the table: the recovery in the West will be tepid at best.

This past week on our programme we illustrated that point by suggesting we should all mind the gap — recalling the famous electronic audio call one hears in the London Underground marking the space between the train and the platform. But in this case, I am suggesting we should mind the gap of some of the global economic projections for next year.

For example, the International Monetary Fund has upped its projection to three percent, from an earlier, more cautious call of two and a half percent. The United Nations division on trade and development UNCTAD is suggesting something much less – just above one and a half percent.

Hold on a second; one is about the half level of the other which reflects the uncertainty that still hovers over next year. In the region, the outlook is brighter with the most populous country, Egypt, projected to grow about four percent and the UAE around three percent. This is where conservative banking rules and deeper pockets for the Gulf oil producers pay off.

G20 finance ministers met in London to try and work out the more delicate issues before their leaders meet in Pittsburgh September 24. Devising formulas to cap and stretch out bonuses are still on the cards as is a drive to create global regulations for derivative products that got us into this mess.

Sticking with our theme this week, there remains a gap that bankers are currently filling on their own. Current national rules governing those products don’t keep pace with those who are creating them. During the go-go days of the past decade that was okay when money was flowing in, but similar to life after 9/11 and the security that was introduced, rules to govern financial security need to evolve.

The G20, with Saudi Arabia and Turkey as members representing the region, want to finalize the rule-making by the end of next year and aim for implementation by 2012. In sum, lawmakers want to make sure the recovery is well in place and that there is no rush to legislate, with the approach being “let’s get it done right or not get it done at all”.

That is the positive way to view that approach. Dominique Strauss-Kahn the Managing Director of the IMF took a different view. Empowered to re-design the institution and play a leading role in the new global architecture, he said the consensus forming was impressive, but that the world is still awaiting stronger measures and definitive leadership.

The consensus seems to be moving towards boosting capital requirements to match the risks taken on by banks. This formula would provide - as U.S. Treasury Secretary Timothy Geithner suggested - shock absorbers to buffer future downturns. What seems to be missing in this equation is the ability to rein in banks during the boom times when they are taking on all the risks. Who will play the “bad cop” if you will? No one seems to have the answer to that just yet.

But that concern goes back to the failure of Lehman Brothers. In an era of globalization and consolidation, there are ever more powerful universal banks that combine commercial and investment banking activities under one umbrella. If they are indeed deemed to big to fail, will they curtail taking all that risk if big brother – the government – is willing to step in?

Probably not, but not putting safeguards in place to prevent that would mean we would be asked yet again to mind the gap in expectation of future financial shocks.

This time of year one can find plenty of tourists at Cambridge – especially from the faster growing emerging markets such as China, India and the Middle East.

Few students are back, but boat traffic on the River Cam is high and tours at the center of Cambridge, near Kings College, are still bustling.

Come mid-September that will change and more of those coming to fill the spaces available for study will be from the Middle East. Cambridge University says those attending from the region are up 15 percent in the past decade. This is not a one-university phenomenon. According to Ucas, Britain’s admission service, applications from the Middle East have surged five-fold since 2001.

It looks like the perfect storm benefiting British education. A number of factors converged at the same time to account for the one way traffic. Let’s call the first one the “H-Factor” as in the long history of British institutions, especially Oxford or Cambridge – simply known as Oxbridge.

“I don't have to tell you about the history,” says Tala Jarjour who is studying her PhD in ethno musicology at Trinity College in Cambridge, “The University is celebrating its 800th year and excellence is the word that comes up very often. You definitely see that and you get it in the experience as a scholar in the institution. So that's always a big plus really.”

Jarjour pauses and adds another key factor, the lack of capacity today in her home country of Syria or in neighboring states in the region. A doctorate in music does not exist she says in the Middle East, at least not yet.

Government leaders admit that university quality and capacity remain difficult hurdles despite the substantial amounts of money dedicated to the cause – a great deal of that devoted to higher education. One cannot expect the switch to be flipped and the lights shine brightly overnight.

I was taken on a tour of Jesus College in Cambridge by a Lebanese scholar of Islamic studies Samir Mahmoud. Due to his area of study and the four years spent on the legendary campus, he gets enquiries from aspiring Oxbridge students in the region.

“If I ask why they want to get in the answer is always because of the prestige,” says Mahmoud, “They want to guarantee a job when they get back. Just carrying that name with them brings a lot of social status in the Middle East and there's a lot of emphasis on social status and prestige.”

That could explain why students from the region (their parents) and those from other non-European countries are willing to pay a premium which is three times higher than local tuition fees. While there was a shortage of spaces available to British undergrads this upcoming year, the international student body is welcomed by these universities.

“It is a growth market,” says Dr. Shaun Curtis of Universities U.K., “British universities are expanding all around the world in terms of their recruitment drives. What we require is a diversification of markets and so we can't rely on China and India to provide the bulk of the student market. We want other countries as well. So we want more Middle East students to come.”

British universities accelerated that recruitment drive in a post 9/11 environment, when U.S. authorities tightened visa requirements and America’s reputation in the region faltered. The tendency of late, due to the competition for undergrad spaces, is to emphasize graduate programs.

I counted at least eight U.K. institutions that have set up campuses, classes or representative offices in the region. The drive is two-fold: they want to encourage more students to come and study in Britain and also set up programs on the ground. This will naturally create a beneficial technology transfer to the region as well.

U.S. universities are not sitting idle and the new occupant at the White House sees education and entrepreneur programs as essential tools to re-build the country’s reputation throughout the region. President Obama made reference to their importance in his Cairo speech.

Students say it is important for these universities to be independent in terms of their management and make the curriculum match the standards found on British or American soil. This drive to set up these satellite campuses, many believe, will falter unless given that independence.

Eventually, with the development of British and U.S. campuses in the Middle East, China and India, these universities will morph into global institutions with not just offices but real campuses closer to where the growth is.

To do so, they need strong brands to be global, but act local and they need that “H-Factor”, a degree of history behind them.

John Defterios’ blog accompanies the weekly business program, Marketplace Middle East (MME) that is dedicated to the latest financial news from the Middle East. As MME anchor, John Defterios talks to the people in the know, finding out their opinions on the big business moves in the region, he provides his views via this weekly blog. We hope you will join the discussion around the issues raised.

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